The US Dollar and Japanese Yen rose in Asia as swelling risk aversion drove safe-haven demand. More of the same appears likely in the hours ahead.

Talking Points

US Dollar, Yen Rise on Haven Demand as Stocks Drop in Asian Trade

S&P 500 Index Futures Suggest Risk Aversion is Likely to Continue

Euro, Pound Unlikely to Find Lasting Cues in ZEW and UK CPI Data

EU FinMin Meeting a Non-Event Absent Progress on Greece, Spain

The US Dollar and Japanese Yen pushed higher in overnight trade as Asian stocks declined, boosting demand for the go-to safe haven currencies. The MSCI Asia Pacific regional benchmark stock index fell 0.6 percent to the lowest level in two months. The newswires cited deteriorating Australian business confidence after an index tracking sentiment from NAB pushed deeper into negative territory in October as well as a report suggesting China may expand property taxes. S&P 500 stock index futures are pointing sharply lower, hinting more of the same may be ahead as risk aversion continues to grip the markets.

Germany’s ZEW Survey of investor confidence headlines the economic data docket, with expectations calling for a narrow improvement in 0November. While this would mark the third consecutive month of moderation, pessimists are nonetheless expected to outweigh optimists polled to produce the metric. Furthermore, a print at in line with economists’ expectations (-10) would fall below the year-to-date average (-5.1), hinting the upswing from September’s reading (-11.5) is unlikely to prove meaningfully supportive for the Euro. Meanwhile, UK CPI is expected to edge upward, putting the year-on-year inflation rate at 2.4 percent. The release is likely to reinforce bets on a wait-and-see posture from the BOE for the time being, bolstering the existing status quo and offering little in terms of a directional catalyst for the British Pound.

European Union finance ministers are also due to meet today after a narrower sit-down of policymakers from the Euro area yesterday. Officials are expected to discuss legislation to bolster budget policy synchronization, the creation of a single regional bank supervisor, and new capital requirements for EU banks. In the absence of progress on near-term issues – specifically the release of additional funding for Greece and the activation of the ECB’s OMT program by way of a Spanish bailout request – the outing is unlikely to offer much support for the single currency.